Lawmakers Concerned About Future of Hospitals

Photo by Christopher P. Keating

Incoming Senate President Pro Tem Martin Looney says the conditions imposed by state regulators on the proposed purchase of Waterbury Hospital were not overly burdensome. Republicans, however, said the conditions killed the deal.

Incoming Senate President Pro Tem Martin Looney says the conditions imposed by state regulators on the proposed purchase of Waterbury Hospital were not overly burdensome. Republicans, however, said the conditions killed the deal. (Photo by Christopher P. Keating)

Top state legislators were surprised Friday at the abrupt collapse of a proposed purchase of five state hospitals, saying that the failure raises questions about the financial future for hospitals in Connecticut.

Lawmakers are raising concerns about the potential closure of some hospitals, which have been in a precarious financial position for years. But the sudden collapse of a deal by Texas-based Tenet Healthcare Corp. represents a watershed decision and a major wake-up call for the future on hospitals, lawmakers said Friday.

Republicans blasted the decision by saying that state regulators had imposed conditions that were so onerous and one-sided that they forced the for-profit Tenet to bail out on the deal. Democrats, however, said the conditions were not overly burdensome and provided protections for unionized employees at the hospitals.

The two top Democrats in the state legislature - House Speaker Brendan Sharkey of Hamden and incoming Senate President Pro Tem Martin Looney of New Haven - said they had no advance notice of a ruling by state regulators on Waterbury Hospital and had not spoken directly to the regulators in advance of the ruling. They said they could not predict the future of the hospital business in Connecticut, but they both said they did not believe that the conditions that were criticized by Tenet had been too onerous.

“People love to have their small, local community hospitals, but they are very expensive,’’ Sharkey said in a detailed interview at the state Capitol.

If the financial conditions worsen, Sharkey said he would not support a taxpayer-funded bailout of Waterbury Hospital.

“I’m not sure that we should be in the business of saving every hospital that runs into financial trouble,’’ said Sharkey, who has talked to hospital executives and has followed the issue closely in recent years. “It’s a new world out there now with regard to hospital policy. Other states have already been through all this, and Connecticut is relatively late to the game. I think we need to recognize there’s a new normal with regard to hospitals. I absolutely believe that Waterbury needs a hospital. There is no question in my mind about that.’’

He added, “But I also believe that market forces are out there that can create a supportable hospital in Waterbury that is economically viable and will serve the city without having to rely on taxpayer subsidies to maintain them.’’

Some officials believe that Waterbury is too small to support two hospitals, and lawmakers have been concerned for years about the future of Waterbury Hospital and nearby St. Mary's - which are both visible from the busy highways in the area.

The issue, Sharkey said, should be viewed in the broader context statewide.

“I think, generally speaking, we’ve got a lot more hospitals in Connecticut than we need,’’ Sharkey said bluntly. “For a state as small as ours, we have a lot of hospitals. … While on the one hand I don’t think the state can subsidize these hospitals just to maintain their existence, I think we do need to let market forces control. I also believe that market forces actually can find the solution to the need. It’s better handled in that realm than through state government intervention.’’

A longtime supporter of the Waterbury hospitals, state Senator Rob Kane of Watertown said that the two hospitals are the largest employer in the area and are crucial to the local economy.

"This would have a huge domino effect if one or two of these hospitals fail,'' Kane told Capitol Watch. "The state of Connecticut dropped the ball on this one. ... I don't blame Tenet for walking away. The regulatory environment in this state is out of control. I can understand them walking away from this situation because it's way too onerous.''

Kane, a Republican who represents towns in the Waterbury suburbs, said state regulators "overstepped their bounds in their involvement in this deal, and now we're going to pay the price for it.''

But Kane said he is not giving up.

"I hope it's not a done deal,'' he said. "I hope there's something we can do or the governor's office can do. I'd hate to see this deal fall through. These hospitals won't survive without this injection of capital. It's a scary proposition if this thing fails. We can't continue to inject ourselves in the free market.''

State Rep. Whit Betts, a Republican, said the deal’s collapse was a huge blow for Bristol because the community could have received $2 million per year in property taxes if the for-profit corporation had acquired the non-profit Bristol Hospital.

“For cash-strapped municipalities, this was a godsend,’’ Betts said in a telephone interview. “The hospitals would be one of the highest taxpayers in the communities. That would be one of the benefits of a for-profit hospital. That’s off the table.’’

Some Republicans blamed the unions for fighting for employee protections at the hospitals.

While Sharkey said flatly that he would not support a taxpayer-funded bailout of Waterbury Hospital, Looney said it is premature to address the issue. Looney gave the oft-quoted phrase of “we’ll jump off that bridge when we come to it.’’

A longtime union supporter, Looney rejected the idea that the conditions imposed by OCA were unreasonable.

“I think the fact that Tenet pulled out maybe is an indication that they really were planning a cut-and-slash effort in terms of jobs and services if they had gotten a chance to take over with a freer hand,’’ Looney said in an interview at the state Capitol. “The fact that they pulled out because of those conditions raises questions about the changes they planned to make if they were allowed to.’’

Looney said he had believed that the 47 conditions by OCA were “a very good thing for the patients and employees in Waterbury’’ if they were enacted.

“I don’t think they were unreasonable,’’ Looney said of the conditions. “I think they were providing legitimate protections for patient care,’’ the level of services and the employees.

Regarding the future, Looney said, “I don’t know whether this ends it as far as Tenet goes or whether it’s another phase in the negotiating process.’’

Concerning views by Republicans that unions have had too much influence over the issue, Looney said, “I don’t think that’s a reasonable view. There is always a need in something like this to provide some protections for medical staff, the levels of care and also employees.’’

He added, “Nobody wants to see a hospital closed. But on the other hand, nobody wants to allow Tenet or any other organization to be able to dictate terms to have everything their own way just because they said they’ll walk away if they don’t.’’